Closing costs from 13k to 17k for $380k NJ home

[Alexie Franck]

Hi All, I need another opinion/clarity about my closing costs. Home is a multifamily for $380k, conventional loan, bought 1 point and interest is 6.125. Initial closing cost estimate was $13.5k. Just received disclosure and it jumped up to o$17k. My closing costs are as much as my down payment. I thought it was to be up to 3% of home purchase price. Then the extras, ie: points. This is over. Please help. Thanks!

[Melissa Maw]

As a loan officer licensed in PA and NJ, I'd like to add a few comments.

First, I would second what @Dave Skow said. Prepaids are NOT closing costs and usually are required by your lender. Escrow is set by law and you cannot forgo it (no matter the down payment) if that is what your lender requires for this type of loan. Every lender/mortgage program is different. It's your money, you're just prepaying taxes, insurance and whatever interest from the day you closed. It's the responsibility of your loan officer to quote this as accurately as possible on the LE. However, the lender will verify and confirm the final numbers once they get the tax cert from the title company, the insurance premium from you (the buyer), etc.

While the "Application fee" is high at a quick glance, if you replace that with the word "underwriting", then the underwriting fee you have on the CD is pretty standard. Its usually $1495 - 1595. 

Credit Report fee is standard. In case anyone is unaware, credit agencies increased their fee in 2024. It now costs over $70 for a single borrower, close to $160 for 2 borrowers. I haven't seen credit report fees that cost $30 since 2021. Traditional banks tend to have lower credit report fees, but the wholesale lenders that I work with generally charge $180 for a credit pull for dual borrowers. 

As for section C - these are all title services and unfortunately, they are common for NJ, even the "Survey" fee.

The only thing I cannot account for is the $1400 MISC fee in Section H.

Hope that helps. If you have questions, just ask your loan officer to go over it line item-by-line item. Personally, I appreciate it when my clients ask me these questions because it means they are taking the time to understand the loan docs.